small business owners testified wednesday before the house small business committee on the effect of the health care law. this is an hour 45 minutes. [inaudible conversations] [inaudible conversations] >> good afternoon. i called this meeting to order. as we are all well aware the health care law requires businesses that employ 50 or more full-time or full-time equivalent employees to offer health insurance or pay an employer mandate penalty or a tax. a critical issue is the

definition of employee but equally important is the issue of which and how many employees are it should be to to the business. the answer may be simple for one business with a single owner however when an individual shares ownership of multiple entities or when a business has multiple owners the answer is less clear. today we will examine the process of determining whether businesses are considered single or multiple entities under the health care law, which requires business owners to aggregate employees and could subject the business to the obamacare employer mandate. according to the national federation of independent business, 39% of small businesses with 20 or more employees on at least 10% of one or more other businesses. to determine if the threshold of 50 or more employees has been met with the situations the health care law utilizes the

internal revenue service code, controlled group business aggregation rules which are complex and confusing even for most experts. some experts have suggested that most small business owners could not interpret these rules without the guidance and related costs of a tax specialist. despite the administration's promises that the health care law would help small businesses, each week seems to bring entrepreneurs more bad news, more costly regulations, more uncertainty and less incentive to grow their business and create jobs. a recent u.s. chamber of commerce international franchise association survey found that 53% of small-business owners leave the law will have a negative impact on their business. our challenging economy many small business owners are simply not hiring or are reducing worker hours to avoid the employer mandate.

thank you to this outstanding panel of witnesses who have taken time from their busy schedules to be here today. we do look forward to your testimony. i now yield to ranking member velazguez for her opening statement. >> thank you mr. chairman. small businesses are that don of our economy but in the past, higher health care costs and declining coverage have hindered small business owners under employees. this has hampered our nations entrepreneurial prowess and held back small businesses. in fact the chairman mentioned the u.s. chamber of commerce has conducted surveys about small businesses asking them what is the main issue that they are concerned about? they talk about the cost of health insurance, to be able to provide and in fact 62% of small businesses in this country provide no health insurance to

their employees, their families or themselves. so if anything, this law will enable small businesses to participate in these changes so that we have a larger pool and in the process we will bring premium costs down because that will provide the kind of leverage that will enable them to keep good premiums. the affordable care act has changed the health care landscape for small firms. it has expanded coverage options, increased purchasing power and given consumers control over their own health care. yet, as with any law of this magnitude, some fixes will need to be made along the way. it happens every day. that is what the legislative process is all about.

we pass laws. we implement them and we will in any way that we understand -- that is the mechanism of legislation is all about. that means listening to the feedback of those most affected and working together to ensure small firms secure quality, affordable health care. today we will do just that by hearing from witnesses about a complicated issue. the health care law includes an employer mandate that requires businesses with more than 50 full-time employees to provide health insurance. its goal is to discourage employee years from dropping coverage and leaving employees on their own to find insurance. while the enforcement of this rule has been delayed until

2015, many small employers must begin now. this hearing is focused on a particular area of the law that many small firms may not be familiar with, the business aggregation rules. traditionally this rule has been used to treat single businesses as an employer for the reasons reasons -- this is not new. we have used them. this is on the books when it comes to benefit plans. this was incorporated into proposed regulation to deter entities from splitting into smaller companies with the purpose of avoiding employer mandate. the intent behind this regulation is amenable but i remain concerned about how this complex rule were impact small firms. what kind of resources will be there to assist small businesses for them to understand the rule

and to abide by the rule? i'm sure as they came as a surprise to many tax experts that these rules are being employed to determine business. unfortunately for many family-owned businesses and franchise owners these rules are not commonplace. for that reason we must consider how the business aggregation rules impact many entrepreneurial business models. for some employers, some small employers have already been applying this rule to comply with it others have a steep learning curve ahead of them. i hope our hearing today provides more information on just how many small employers currently navigate this rule and how many more will be newly affected. our witnesses today will help walk us through these constant constant --

complicated standards and how best with careful planning and appropriate outreach. small employers may avoid many polls with new obligations on the affordable care act. i think all the witnesses for being here and i look forward to your insightful comments. thank you very much mr. chairman. i yield back. >> our first witness today is deborah walker. ms. walker's a certified public accountant and the national director of compensation and benefits for cherry bekaert llp in tysons corner virginia. she advises small and large businesses on compensation benefits and employment tax matters. welcome and you have five minutes. >> good afternoon chairman collins, ranking member alice glass and members of the committee. thank you for hosting this important hearing on the effect of the business aggregation rules on small business in applying the healthcarhealthcar e provisions.

i'm deborah walker a cpa with over 35 years of experience in the employee benefits area. to determine if the employer is subject to the share of responsibility rules of the affordable care act business needs to determine who the employer is and that determination is made by looking at related entities, related by common ownership and attribution and also by services that the entities provide to each other. to make the determination one needs to understand detailed ownership and the services that are provided to each other. my written submission describes these rules in excruciating detail and i can assure you that no one would apply the rules in a complex situation without looking at the regulations. the rules as mentioned are used by the affordable care act are the same rules used for determining whether qualified retirement plan benefits are provided on a nondirt discriminatory basis to a fair

cross-section of employees. those are voluntary and not mandatory. in addition because we are looking at right line tests, bright line tests offer the opportunity as evidence by the qualified plan rules of ways to plan around them. in other words for people to avoid the rules. in addition because they are bright line tests it often happens that the application doesn't make as much sense as that otherwise may. in the health care contacts were and we are looking at whether we have 50 employees are not it is a complicated tests for the few taxpayers that are nearing the 50 employee limit. one can expect that those employers nearing the 50 employee limit would in fact consider the increased healthcarhealthcar e costs in deciding whether to hire additional workers that will lead to inefficient in unwarranted economic nadir.

many small employers as mentioned offer a retirement plan, if oral one case safe harbor plan and they don't even need to apply these rules because they are not subject to discrimination test due to the safe harbor. the small businesses could not do this without advice and many of the advisers for small business are not familiar with the rules. therefore i determine -- i offered outskirts of suggestion is a suggestion that would be a circumstances test. it would look to who is the individual that hires, that fires makes purchasing decisions and accepts prices. who operates a business on a day-to-day basis and in that case we don't have to worry about who is a passive investor and aggregate those entities. by focusing on control of day-to-day operations the employer would be defined by the industry in which that employer individual operates and it wouldn't affect the competitive position of the business. the opportunity to avoid the

bright line tests through planning would not be available and the unwanted effect for bright line tests would not exist. this circumstance i.d. idea is not new. we use it and we have in the tax law for years, 30 or 40 years in determining whether somebody is an employee or independent contractor. people tried in the 80s to have certainty with determining whether someone is an employer independent contractor and it was determined that there were too many varied situations between service providers and recipients and it was too hard to draw a hard and fast bright line rule and bright line rules with the circumvented. what we have is a 20 factor test. the 20 factor test, there is not specific way to any factor. in fact the weight of the factor changes depending on the industry and in the advisor and

irs could use the 20 others and use the particular situation and make a judgment call. it's a fax and circumstances test subject to audit. there's another place where we talk about separate lines of business. this is also on the qualified retirement plan area a separate line of business, a portion of an employer identified by property and services provided to a customer. the regulations define whether it's a separate line of business and it has to be organized individually. there has to be a distinct profit center and no more moderate overlap between -- and employees. more of the facts and circumstances test may be more appropriate. determination is always subject to audit by the irs. the rules could require a notice requirement. the rules could also have a

procedure such as they do for a separate line of business and employee independent contractors where in fact the tube businesses could apply to the irs for the irs to make a determination. to summarize the mechanical qualified plan rules are overly complex and understand by only a limited number of tax professionals. a small as this can't apply them without professional help. it's a small subset of professionals that deal with these rules in these rules are only going to play to businesses for a few years of their lifecycle and they air close to the 50 employee test. for that reason facts and circumstances based on who controls day-to-day businesses is a much more logical rule. the reports could list characteristics of management control and taxpayers would be able to make a judgment as to whether --

what constitutes the employer for the purposes of these rules. thank you for your time and attention. >> thank you ms. walker. i would like to give to ranking member os quiz. >> is my pleasure to introduce a sibyl bogardus. ms. bogardus's attorney serving as a chief compliance officer for hoff international insurance services. she provides compliance and consulting services regarding health plans and employee benefits. ms. bogardus was previously chosen as one of the 100 leading women in insurance by business insurance and was selected as one of the 25 most influential as those women by the louis business journal. welcome and thank you for being here. >> thank you chairman colin's and ranking member velazguez. i am honored and very happy to be here to be able to give some

comments and testimony on this very important issue. i want to have an echo for what ms. walker said regarding possible compromises or concessions toward small businesses. i think a control test would be a great first to as opposed to a bright line standard. i want everyone to keep in mind as we go through these types of discussions that the importance of the 50 employee rule and the control group rules which can cause small businesses to be treated as one employer has impact not just on the basic issue of whether an employer will be subject to the law as a whole. it has huge implications also for the practical compliance under the rules. i want to address specifically today the issues of complexity and also the issues of awareness and then finally confusion. i think the issue of complexity

as you read through the rules very quickly begin to learn as you have seen from the written testimony and comments that these are very complex rules. it definitely requires a tax advisor or a corporate planner to assist an employer and employee in determining whether they have a control group. as to the awareness the level of awareness is low. if an employer has voluntarily decided to create a retirement plan, guess they generally dress these issues but for employers that are made up of various small groups they have likely not done this if they had not put in place a retirement plan. while it is true insurance carriers ask questions about the employer's size they do so not so much to do an analysis. it is not an announces. they're asking questions about size so they can put in their programs how croker should be it ministered and whether medicare secondary payroll supply and other issues like that that is

not an analysis of a control group. they're also asking that question so they can determine whether they will issue a small group or large a large group policy. we are seeing confusion around that issue. for example this week i received an e-mail regarding a small employer in color for you and they were unable to get a small employer policy because they were considered to be part of a larger control group by the insurance carrier. the insurance carrier in california would not issued a policy because it would be discriminatory however that same controlled group had a small employer in arizona and was able to get the policy. for the employees in california low-paid employees are now put into a very expensive cpl and they cannot afford it. we have seen quite a bit of low awareness around this issue even among not just small employers but large employers. they say many times i wasn't aware of this and we do get

comments that are very incredulous that this would be the case. in terms of some of the additional confusion there are myths around associatiassociati on plans. unless you have stickiness within a group it is difficult to put unrelated or even fairly closely related employers together. some insurance carriers will not write them even though they technically would be a control group for u.s. tax purposes. so keep that in mind. part of the problem is the practical access to the insurance coverage which the law enforcement does not guarantee for the small employers. are there planning opportunities cs. do we see smaller employers trying to use those to avoid compliance with the law? not yet in part of the awareness is a little bit of the reaction to the delays that have occurred the employer's belief there have been delays and those delays will continue. for smaller businesses there is

a sentiment that the rules for the large employers were delayed which they were until 2015 however for smaller businesses have felt many of them the brunt of the expensive hurdles this year. of our clients that were it offered an early renewal option to renew their policy this december and to delay the cost impacts of health reform invariably they have taken that offered the carrier has extended it so they have basically kicked the issue down the road for another year so to speak. we will hear more about that next fall, additional policy cancellations and increases. we are seeing some premium increases of 100% for smaller employers so it's a matter of the law providing access to coverage with no pre-existing conditions but it is not by any means affordable even for the small businesses. small businesses are also different if they are part of the controlled group.

that does not mean there is actual control or authority or even cooperation among the various owners. there is no, generally no central payroll system and no central h.r. person and they handled that function in various locations but not centrally. commonly there are situations where the employer simply don't have the common point person and of course they could appoint someone but creating common systems to determine whether the employer is 50 employers are more and then also consistency across the group for payroll purposes is very difficult. i want to also touch quickly on participation requirements that insurance carriers have been a small group marketplace. the rules under the federal law to allow participation up to 70%. the insurance carrier can require that percentage to elect coverage. alternatively many carriers require the employer to pay significant percentage of the

premium for employee only sometimes banana% of the costs of the concept of the employer will only pay for the coverage based on the 9.5% rule is not the case, not for small employers and not for larger employers. employees are paying significantly more because of the fact they cannot know household income. the discrimination rules which have yet to be issued our continuing concern. just for information to senior counsel for the treasury department indicated to me that they cannot enforce those rules and that is what we have experienced in actual practice. even when there is an audit they asked to check it off their list when they're done with the issue. they can't enforce the rules for self-funded plans it will be difficult for them to do so for small and share plans and difficult for the employers to coordinate a nondiscrinondiscri minatory program across various companies in different industries in different states. automatic enrollment should be

above 200 will be another serious issue in that role does eventually take the fact and finally new issues commonly held groups for federal tax purposes may not be sufficiently related for either kerry or purposes. they may not issue a policy or the states may consider those groups to be in illegal under state law even though it's not being formed as a self-funded plan to do anything to avoid state rules. it would require licensing as an insurance carrier for those groups if they would try to -- and also capitalization is a carrier and regulation as a carrier. very onerous. just in summary i think there are many issues that are affecting the smaller employers awareness, complexity of the rule certainly but i think the issues around confusion and the fear of the smaller employers as to what impacts they will feel from the law and what they should do now with the uncertainty without regulations.

thank you. >> thank you ms. bogardus. our next witness is ellis winstanley. ellis is the chief executive officer for tradelogic in austin texas. with several family members mr. winstanley owns a number of business including restaurants as opera company and promotional products company. welcome. >> chairman collins ranking member of velazguez and members of the house committee on small business thank you for the opportunity to testify today on the effects of business segregation was included in the health care law on small businesses like ours. my name is ellis winstanley and i'm the ceo of tradelogic. i own business in austin texas with my twin brother and other partners. on behalf of the national restaurant association leading trade organization for the restaurant food service industry. and industry. i'm a business executive with a

successful record of starting up turning run a growing businesses and hospitality construction software printing and promotional products and industries. my brother and i are entrepreneurs get started in business while we were students at the university of texas. we are known for rescuing will open historic restaurant brands and turn them round to maintain their place in the community as contributors and job creators. currently we own eight restaurants with our partners which i have received david -- on a day-to-day basis. we have partnered with their parents and printing and proposed mall products. we own software to mount companies one of which is tradelogic this serves as her management company. the health care law presents compliance challenges for all of our small business that particularly the restaurant and food service operations due to the unique characteristics of our workforce. it's difficult for many restaurants especially small businesses to determine how the law impacts us and will he must do to comply. employer aggregation rules present a significant complication to our business. it may seem like a simple thing to do but due to the aggregation

rules and the structure of many restaurant companies determining the employer is more complicated than many expect great austin texas like many cities around the country is a rapidly developing restaurant community and we like most operators we now participate in multiple restaurant entities. various partners often with family members. that we consider each operation to be a small business many of us are discovering for the purpose of the health care law all of the businesses must be considered one employer to the aggregation rule. this threatens to stop the development of restaurants in our community. application of these aggregation rules is already having an impact on small businesses consuming bible time and resources is businesses attempt to decipher the law's effect on them. those of our small business is each have less than 50 full-time employees in the penalty would not be considered applicable to large employers. two are highly seasonal businesses and may not be considered large depending on the calendar month and

uncontrollable factors such as whether or not our legislature is in session and the academic calendars related to surrounding universities. they summoned her standing of the aggregation rules i believe we will be considered as one employer and the law thus an applicable large employer. the effect of this is the cost of doing business fridge or companies will go up. restaurants operate on in march and started forcing a raiders to manage labor costs closely to remain viable. austin texas men's one of the strongest economies in the country but since the recession we have regularly tighten their belts to manage rising costs and we are very much still feeling the impacts including double digit increases even since the law was passed. this puts pressure on our team, are vendors, our pricing and in the end our customers. i see the costs associated with the way a health care law's been implemented as adding significantly to that pressure. in addition to the aggregation

rules there are several other sections sections of the law that impact restaurant operations and similar small businesses. while the increasing cost of offering coverage remains a major concern unconcerned about the administrative demands the compliance will impose on our businesses pay the restaurant and food service and should attract people seeking a flexible work environment. whether they are students between careers or just looking for a second job to make ends meet there are significant movement in and out of the industry and in between employers that given the short-term nature of individual employment the administrative burden of educating and processing enrollments and declinatideclinati on's can prove almost as expensive as the coverage itself. restauranrestauran ts cannot absorb this cost and ultimately the cost will be borne by the public as a whole. the implementation threatens the safe haven of the flexible work environment for those who depend on it. thank you for the opportunity to testify before you today regarding the health care law and its effects of the business aggregation rules on small businesses like ours.

i'm proud and grateful for the responsibility to serve my community in austin texas serving customers. we are committed to working with congress to find solutions that foster growth and truly benefit the communities we serve. >> thank you mr. winstanley. our final witnesses donna baker. she holds an mba from michigan state university and a b.a. in accounting from siena heights university. welcome. >> thank you chairman collins and ranking member velazguez and members of the committee. it's an honor to be here to testify on this subject. i am donna baker. i've been a cpa for 25 years and i've owned my own accounting firm for the last 13 years. i lived and practiced practiced and when lake county michigan which is a very small rural area. on top of owning my own cpa for miles on a small company.

i've invested in a retail store and my husband who is also here today is a partner in our family dairy farm. as you have already heard the business aggregation rules require any group of companies under common control to be treated as a single employer. the primary key in determining which company should be combined is directed to ownership but not operational control. these rules may cause unrelated businesses held by family members or trusts to be aggregated. companies within a control group did not need to have the same management or even be in the same industry. also the business aggregation rules are very complicated as you have heard and are rarely applicable to small businesses. therefore they are unfamiliar to small distances and small-business advisers.

i have had many webinars and training on the aca rules and boston materials will mention the control group rules apply to not cover the specific rules and unfortunately i think many as this advisers the deal is merely small as this is assume control groups means hands-on control instead of the emphasis of director attributed ownership. i have two examples of applying these control groups to businesses. one is my own personal business. like i said i own 100% of the small cpa firm that i also manage along with the payroll company that i manage and i have invested in a retail store however that is an investment. i do not manage or operate that on a day-to-day basis. then of course my husband's farm he is a partner with his brother

in the dairy farm. i have no management responsibilities. i do not make decisions for that company but my name is on some of the land and i do provide some keeping services. based on the business aggregation rules we would have to combine all four of those entities. we are not close to 50 employees yet but close and the payroll is very quickly growing. my second example is one of my clients clients. i than elderly woman that owns 100% to local restaurants and her son manages and controls all of the business decisions in those two restaurants. she recently provided the capital for her nephew to open a restaurant in florida in which the restaurant in florida, the nephew manages and makes the business decisions for that restaurant. under the current business aggregation rules those three entities would be combined and they would exceed the 50 full-time equivalents and require them to provide the

minimum essential health insurance benefits. so those two examples illustrate how the control group rules will aggregate businesses that are not directly owned by the same person, that do not have the same management, are not in the same industry it may not even been be in the same state. therefore the implications of requiring small businesses to use these rules could create several negative effects. it could hinder growth and discourage owners from hiring new employees. it can create that environment where the owners try to manipulate the ownership of signage is or minimize their employees and keep them within the 30 hours. it could discourage small-business owners from investing in other businesses and it could require them to provide health insurance benefits in industries where it's not typically the norm and the additional cost could create a difficulty for them to compete

in those industries. lastly i would like to mention increased costs of my own plan. i do for a basic health insurance for people in my accounting firm in my payroll company. this policy has been canceled and the closest policy i have been quoted at a 44% increase would have reduced benefits. it would have higher co-pays and higher maximum out-of-pocket expenses. these increased costs would be very difficult to absorb. thank you. >> thank you very much ms. baker. we will now enter questioning period and i guess i would like to start by stating the obvious. hearings like this aware happening today give us all an opportunity to a chain testimony on the record that will highlight the consequences intended and unintended of various laws and regulations and it's very help old as ms. velasquez says as we look at potential changes that we need

and again to state the obvious we all need and want more jobs in the economy. the economy is kind of languishing today and poor jobs is what everything is about, getting the employment down in increasing payroll across the country to drive the economy. >> would you yield? i will join you in supporting legislation in passing the jobs bill that we have had for so long. but we need is to pass legislation to create jobs and we are just waiting for the leadership to do so. >> i can appreciate that. it is jobs that we may disagree on what stimulates jobs. i myself believe in lower taxes, less government interference and certainly we will have other questions today that indicate the impact of the aca. what i heard today though and again i'm a small business guide. we have the mantra grow or die and if you're not growing you're

not doing what you should do as an entrepreneur. growth requires capital. accounts receivable inventory etc. etc. and any old all of dollars wasted on regulatory burdens such as the business aggregation rule and hiring a tax expert is in fact a dollar that's not available to invest in growth. briefly to reconfirm i think i heard it in your testimony that we would like to go down the line starting with ms. walker and ask if you think this business aggregation rule is as it's currently written would have been negative impact on jobs and the economy, hindering job creation and economic growth that therefore should be altered? >> i think anytime you have a right line tests it's going to hinder people that don't want to cross the bright line test and that in this case is going to hinder hiring, hinder expansion

and the grow or die, they are just going to choose to stop growth and perhaps move over to other forms of -- other ownership so yes. >> thank you. ms. bekaert. >> mr. chairman that provisions definitely to hinder job growth and a hinder strong job growth. by that i mean that the jobs that could be created in the future would instead he part-time jobs. that is of course advisers on this topic have their own bag of trip and it's definitely possible to stay outside of compliance with respect to each individual employee if you keep that individual and a part-time position. full-time jobs are absolutely necessary. it's hard to have coordination

on the part of the employee much less two separate employers so strong job growth is necessary and of course there are other issues involved as well. i agree that the funds that are spent to analyze the issue and then also to comply are extremely high. it's not just the initial cost. it's the artistic patient every single year in the premium. >> thank you. mr. winstanley. >> i think what we are seeing now is less people have insurance then have had insurance and it's the reverse effect of what we are hoping to achieve here. i think we have also in a restaurant industry specifically have heard about a lot of people being pushed below 30 hours a week. i think that's extremely negative for the industry. i think that's negative for the employees and long-term while some groups feel that their only

option, in the long run it's not healthy. >> thank you. ms. baker. >> yes, i do. as in my testimony think there are a lot of concerns but i'm also concerned with those that have the true entrepreneurial spirit to be discouraged from investing in more small businesses in other areas. that would definitely hinder. >> one more quick question and then i will yield to miss ls quiz. kind of a yes/no. we are focused on the complex business but we are talking about other issues and certain glee mr. winstanley has talked about the impact of the employers getting there hours cut to get them under the 30 hour world. as we look and try to message changes that could be made i would like to ask each of you if you think in your opinion the 30 hour definition of full-time should be increased back to 40

hours? ms. walker? >> yes, it will prevent the people from ratcheting workers down to 30 hours and leave them out or be. >> ms. bekaert. >> yes. >> mr. winstanley. >> yes. >> ms. baker. >> yes, i do. >> the other question you talk about the 50 and there are a lot of companies and not 40 plus wanting to go to 75 and under obamacare is this arbitrary selection of 50 defining a large corporation doesn't fit with the entrepreneurial spirit. in the same, what do you think yes or no, do you think we should increase beyond 50 the number of ftes that which herger the affordable care at? i don't know if it's 100 or 150 but do you believe that 50 is

too low and stifles job creation and therefore we as congress should increase it to a number higher than 50? >> the the bright line test of a certain number of people is the wrong test. you should use the circumstances test on who has day-to-day control. if you increase it to 50 the same thing that happens at 50 will be happening beyond 50 whether it's 75, 150, 200 or 500 >> as with the 30 hour rule i would agree increasing the number above 50 would eliminate the number of issues but is there would have to be a change to the statute. >> mr. winstanley. >> the challenge comes that every industry can be put in the same box. in the evaluation of any organization that tries to encapsulate multiple industries

there is different criteria for different streets and looking at an industry with a somewhat mobile workforce by general definition a short-term workforce i think the cost is significantly higher for the same number of employees, the same number of ftes that would be with a longer-term workforce. yes i think it should be higher but i don't think you should be the same for each. >> ms. baker. >> i think i would definitely help but facts and circumstance would make a whole lot more since when it comes to defining control and then we need to have something that is adding additional complications. >> thank you all. i will yield to ranking member of velasquez. >> thank you mr. chairman. i just would like to call attention to the members of the committee to the hearing we conducted here in this committee on that overnight.

the definition of full-time employee and small businesses. one of the expert witnesses was dean baker the executive director for the center of economic policy and research you can do it analyze data right after we passed the affordable care act and where small businesses words that -- expecting employer mandate to go into effect. since then he didn't find any data that showed small businesses were not hiring employees or increasing the hours because when the affordable care act was ineffective and people were expecting the employer mandate to go into effect, so the federal reserve from san francisco conduct did another

research demonstrating that it has not had any effect. but like any law, we will continue to monitor and make the fixes that are necessary. my question to the panel of witnesses, the business aggregation group are meant to prevent -- in your opinion what is the correct balance between preventing abuses and protecting businesses from potential penalties? ms. walker. >> i think anytime that you have a bright line test is back to that brought -- bright line and not crosses so what you have to do is come back and put it into a fax and circumstances test where you apply judgment, i apply judgment and the irs applies judgment.

each person decides based on the facts and circumstances of that situation whether there should be an aggregation, wether it truly operates as an employer. >> you see a final regulation should incorporate the facts and circumstances tests? >> yes, that would be a facts and circumstances change however. >> i agree that the facts and circumstances test is a much better standard again requiring a legislative change. >> would that create more jobs? >> i think wood and serious consideration should be given to changing the threshold from 50 to perhaps 250 and look at it on an industry basis or perhaps blend the two. there are some precedence for using 250 such as the payroll reporting rule. >> i think when you look at the

original context that the controlled group was put together for the irs it was put out there to stimulate the use of corporations. the waive has been implemented now it has had the alternate effect. i think with businesses need is clarity around what the rules are and need rules that they can reasonably work with base on the industry they are in. then i think job growth will loosen up. >> thank you. ms. baker i would just like to ask you another question. when it comes to contracted programs in the federal government or maybe ms. bekaert ms. bekaert -- bogardus. a business must meet ownership by holding majority of shares but also demonstrate control

over business operation and he described that in your testimony. yet for purposes of the aca business aggregation rules only only -- is considered. which standard in your opinion is a better indicator? >> i am not sure if i really got that but to me it would be control over the entity. the day-to-day operations and the decision-making not just investments. the day-to-day operations which supports the facts and circumstance that they have been discussing here. >> ms. bekaert. >> i would agree the day-to-day operations which is also necessary for compliance. as i said before small businesses don't have centralized systems, payroll and h.r..

[inaudible] >> it this point i would like to yield five minutes to representative tipton. >> thank you mr. chairman. i would like to start out with mr. winstanley and the variety of businesses you have. do you file separate tax returns? >> yes, they all file separate tax returns. >> are you allowed if you have the loss on your tradelogic business your small software business versus your restaurant can you write that loss off against your restauranrestauran t? >> they are all separate. >> what happened to business aggregation? >> there is a significant administrative burden. >> effectively what we are seeing is a policy to be able to force you to be able to provide that health care.

has that impacted your ability to create jobs? >> yes. >> we just heard comment that there is no data and i will quote that again. there is no data that small businesses are not hiring is a result of the implementation of the presence affordable care at, no effect on job hiring. is that your experience? >> no, it is not. >> anyone else to -- was to comment? >> no, it's not. >> businesses aren't hiring because of the affordable care act? >> i believe it's draining resources from the companies that would otherwise grow the businesses. >> very interesting because we are dealing with real-life experiences and i appreciate that testimony. i come from rural colorado and i'm a small business guide. do you have any experience and perhaps the cpas on the panel

can address this the best. are you seeing insurance cost differences between businesses and rural areas versus urban areas? and what i can speak to is the state of colorado, if you punch in a rural said code for your health care insurance your paying a 65% premium compared to people that are living in urban colorado. are you seeing those same sorts of circumstances? >> i'm sorry, i will have to pass that to the insurance person. >> i can address that. that is happening and it does happen exists there are fewer facilities in the rural areas. they can charge what they want to charge because that is the only emergency room. >> since you have a little bit of experience with this is it a little more typical in this rural areas to see a lower income than we do in urban

america? >> yes, sir. >> we hear a lot of talk here in washington coming out of this administration about income inequality but i'm hearing testimony that the administration or its policies are forcing you to cut the incomes of people by reducing their hours. we are hearing the people that live in rural america who earn less are going to be paying more for what is now law that you must obey to buy insurance. is that correct? >> the simple answer is yes. >> the simple answer is yes. effectively what we are seeing is a system that is not affordable and we can certainly get into the accessibility issues as well. going back to the aggregation rules specifically trying to address on this. can anyone on the panel -- small business guide. i want to deal to produce my product to provide for my family. can you give me to send insisted be able to define the

aggregation rule anyone? >> a parent subsidiary group for you own 80% of the chain of corporations, brother sister corporation that owned 50% and in conjunction 80% and then the affiliated service group rules. those rules don't assist terry have ownership but if i provide management services to another business that will be aggregated >> a small business site, you are a cpa. that is about as clear to me to really be able to understand that. we have had a london testimony on this committee. the rules and regulations and this is another one that we are talking about today, are killing jobs in america and killing job hiring prospects today when we need to be hiring people. how much more is this going to cost small business is like mr.

mr. winstanley who are working on it barrow profit margin. any idea of? >> anytime we look at the rules and the situation as complicated as his with different ownership you have to sit down with the chart. when he transfers ownership to other people you have to go to the chart and you are going to have have to ask him who does the management or is different businesses, the does the software company in fact do payroll or the restaurants and those types of questions and then you will put it altogether all together. once you reach 50 people he will have to comply with the rules and then he knows which companies in the pot. he has to provide minimal essential coverage to those workers. >> a lot of money. thank you mr. chairman and i yield that. >> at this point it would like to yield five minutes to representative meng. >> thank you mr. chair. thank you ranking member of velázquez. i had a question i think it was

mr. winstanley who testified that you believe fewer people have health insurance now. >> i believe that fewer people are accepting health insurance now that it is available to them. >> i'm just curious. i know there are a lot of good employers out there like you and ms. baker who have always provided health insurance to your employees. i represent a district in queens in new york city were a lot of employers have not always done the right thing like you ms. baker and have not provided insurance to their employees and have taken many employees around the country who don't speak english and are not familiar with the rules. statistics have shown that on sunday and monday alone 29,000 people signed up for the new health care law on the web site after two days and i was just wondering what advice could you have given or would you give to a lot of these employees were small business employers who

have not provided insurance in the past? and anyone can answer. >> shirt. we like to consider ourselves a good employer and we have provided insurance in the past. the nature is the cost of insurance has risen drastically in last few years and most of the young people who are healthy simply drop off the plan which makes the costs go up even more. so we have got a situation where people are willing to pay for insurance despite the fact that we are continuing to increase our contribution and it's become a situation and i only know from my own experiences what we are dealing with. i have to believe there are a lot of other small businesses round the country who have experienced the exact same thing and if you multiply all of those than that is significant. >> will the gentlelady yield?

i would like to relate the fact that in massachusetts when they pass a law and implemented it the target of the young people were not signing on and then later on they did in the role into the affordable care act. we believe that type of trend that we saw in massachusetts will be seen throughout the country. >> can i answer? from my own personal situation, i am in one of the rural areas with very high health insurance and lower income. our county has about 99,000 as a population with an average household income of the middle 40 thousands. as i struggled to provide more health insurance and need -- if i can stay at 50 i will. in the meantime 40 to 44% health insurance increase would be much

easier for me to put my employees on the exchange. it's a lot cheaper to revive that than for me to absorb the additional cost. >> i would just comment that if the additional cost of adding each employee would he approximately $4000 to provide insurance to that individual at an affordable rate it may be a smaller figure and in some places higher than others. that does stump the job growth. i will say the law itself is having an impact on the cost and we are seeing people not enroll in the coverage. maybe in the past they would have enrolled because the costs are just higher. we have traditionally seen young individuals not enroll in the coverage even if it cost them $20 it paid.

not and it's a matter of individual choice. they're looking at the coverage and saying i would rather have the money. in the bigger picture in the context of wages if people would rather have the money the affordable care act takes that off the table if they have to be offered insurance. >> thank you. i would yield five minutes to representative luetkemeyer. >> thank you mr. chairman. one of the things we are seeing discussed today is a problem with companies trying to deal with this. i know there was an economist in the committee here recently and they had done a small business survey. 76% of the businesses surveyed said they were not going to higher in the next six months. i think ms. walker you have

mentioned in your testimony something like not hiring workers are limited working hours. have you seen this with your practice that businesses are starting to limit their hours and can you give me the idea of the number of businesses you are talking about? >> what i have seen is that businesses tend to hire new workers at less than 30 hours so when we have to expand we are going to expand on a part-time basis. one of the other things i saw in a statistic yesterday for a slide presentation, if you go back two years they were six full-time workers and for everyone part-time worker. that has flips now such that it's one full-time worker hired for every for part-time workers and these are dol statistics. ..

>> the concern of the vote the dawn compliance is to back away? >> correct. is it maybe a smaller entity or subsidiary of one state without the headquarters location so it may not be

the insurance contract as a whole and they back away. >> all the of rules promulgated from the health care lot? >> nosair. they are not. the rules we have currently of's paid one dash play or pay work mandated early last year we have a lack of final guidance of the industry and a specific issues there are impacts and unintended consequences of rules issue that need to be fixed and resolved and we do not know basic information such as if we will get transition relief for a particular situation such as counting employees during 2015 as we

are less than one month away from the calendar year that most start 2014 the employer needs to go. reelecting guidance operating in the area of this is what lehigh huang dash what we do today. >> how did you hope to play and with the uncertainty that the rules are not obligated as well as consequences of what may or may not happen? >> we need us three or five strategy in real is have a plan b. but we it buys and have some small business clients but advises many large employers. i know not every small employer has access tear advisers with that level of sophistication. >> 84 being here today. it is great to be said it --

free to be here for those real-life consequences of what goes on in washington affects the real people in the real world. how much time you spend with compliance with the health care law? >> it is a very significant distraction from our business over the last couple of years. especially we try to ascertain where it will go and where things will land. our administrative office spends a lot of time on it. it takes a lot of our energy >> i have been flooded with questions and pro calls from my clients there is a lot of confusion if they have to provide health insurance a and when will live be mandated? i have not tracked the time

specifically but it is a burden on my practice to audiences of questions that are out there. >> those are all bored by your business in you do not make money. thank you for your testimony >> we do have time for another question but we will call-up the congresswoman. >> thank you for holding the hearing. with the thought that we did hear some unintended consequences that we have the belief that friends of the other side would like to work on fixing some of these problems. i get frustrated in these hearings because the main purpose is to have more bad stuff to talk about. i would love for this

committee to actually work on some fixes a and we even heard of compromises that could make a better. but that will law have been. we don't have partners of the other side who want to impact business or doesn't take any time to fix it. we're more than willing to fix things that nobody thought about that to have the unintended consequences because we love our small business. this is one of the committees that i enjoy when i go back home to my district is a lawsuit angeles. talking to my small business to find out what we can do to help them out. it is frustrating to know there is no intention on the other side all of the testaverde nobody is willing to work with us to fix this. having said that, ms.

bogardus, the business segregation rules already applied to many aspects of business law like cobra. i know some of these founded a surprise that they also included compliance as it relates to the affordable care act. knu explained it was a surprise when these rules already existed in small businesses are already in compliance from other areas? maybe there are some small businesses that have to come into contact your compliance with these laws for the first time a and the us know why it was the surprise here and maybe what kind of small businesses are experiences

-- experiencing this for the first time that never had to comply with this law before? >> representative, yes. the answer to that while the rules have been in the fact for prison time with cobra and technical issues including retirement places of the business hasn't faltered then the analysis has not been done. even if the small business offers a health plan the insurance carrier says how many employees and then there is not be an analysis. to have the ability time for the insurance carrier to work in a determined the size of a particular over the entire control group.

the carrier has no obligation more consideration for what the rest of the control group is addressed or not. it does come as a surprise. >> this is a mandate to where it provides health insurance to provide to some in my note others. >> what criteria would you use? >> with job retention tiffin by the industry. >> different industries have different types of retirement plans and health benefits. >> when people save more companies will drop their health care plans? i don't know what facts or empirical data or research

will drive anyone to conclude that companies will drop health insurance because when we hold hearings here, one of the issues that companies and small business bring to us is to find skilled workers for a bright ayrshire in order to retain those skilled workers, if you provide health care as the package job offer, if they would be more than willing to come to your company. >> before i yield back there is no balance but the atp national employment report which measures private employment says small businesses led the way with job creation in one had to choose thousand jobs in november. thank you. estimate there is never

enough jobs so i would like more jobs. we will cut it down to the wire but go ahead. >> just having looked at those statistics we need to be around 350,000 every month we are still devastated upside-down. our work force participation numbers but we are up against the clock. ms. bogardus, just because i hate to make you do it a third time on the aggregation rules how different these rules are in regards to what you see with the new health care lot compared to the past. kid you help to explain the

of mechanics? >> i mailed -- may yield part of this question to ms. walker. the mechanics are different because they have not done this in the past operating under the safe harbor. with business classification. what we see with actual real-life with the creation of job creation if employers are hiring or not hiring, i would caution on the statistics that you hear because i know that many clients will not answer that question because they have seen the fallout in the industry whether industries of restaurants are others to address questions like that. i don't believe you get it complete estimate that maybe

a different hearing and that happens once where voluntary surveys turned out to be audited the next day. now ms. baker with your background in the cia of world, a deal with the reality of businesses trying to use rived. have you had clients with smart lawyers to say how do we gain the system? you don't have to throw in a new one end of the bus. >> most of the businesses that we deal with is what they ask me. what do i do to avoid this?

>> one more time as our society grows, a bewildered allot to of all our businesses into trying to find a way to achieve the law and in many ways just to survive. >> but that is the first reaction and what do i have to do to avoid this? >>. >> if i remember your testimony you actually reach out your capital to start other businesses but yet does this become a chilly defect why you having to capitalize economic growth to around 2:00 a.m. and had you been approached on how to gave the system? >> it is one more variable every time we do something.

so first we have to figure it out and think we understood and but life the the issue is the had to the small banks help economic growth or take care of our brothers in sisters hid what we've make the debt some point we have to wake up to decide that we should be

about the people be represented and not the ability to justify things we have done that don't work. with that i yield back. >> at this point in time we have boats so we will adjourn about 30 minutes. then after which we will reconvene. right now we are adjourned. [inaudible conversations] >> the committee will reconvene. i would next step may keep you very rich mr. chairman, you imply is small employers? direct? to back i y h threw under is a rules of overlap period

shareholders or she has some of these situations but. >> i fee'' of the best examples is what the blind and the elderly woman whoed i invested in to the restaurant for her son in one state ian heard nephewin in another state tailback required aggregation rules. the other situation was a family business where they were making investments and one was a golf course thatth was not in the same area then those two businesses. oh,

>> are we missing someone? >> we will pause momentarily. the can continue. >> day you have a tax specialist on your staff, mr. winstanley? >> food you site. >> we hired the outside counsel. >> we have to hire from the outside.

>> how much is that?s. >> it ranges but it is verywyer expensive. >> a lawyer by the hour?s >> so it is pretty costly? >> i imagine the nature of our business would ben th significantly more than the. >> five or 10,000? >> maybe more. >> more than that? >> ms. bogardus? most web banners or power point presentations do not include materials of the business aggregation rules. does your company's? >> we address the issue inconsistent they refer to as a brokerage firm refer our clients to their tax

agent legal advisers to have a better understanding ofns many corporations are, business arrangements that requires an analysis ofons. options or documents treated for purposes other thanso addressing i business segregation so it can be extremely detailed fit. >> how do they find out? >> quite frankly there adviser? >> more than $10,000? >> if they have current legal counsel that raises the issue if they read about it on their own they know there is information on thee as ira's web site as well. >> are you an attorney? >> yes.nder

>> paid by the hour? >> yes, sir. >> if i had my attorney who have to read thousands of pages of regulations is being charged by the hour? >> it does not necessarilyen you require the attorney to read the entire act but requires a analysis and experience with the control, ve group that is very detailed and very special area of the of law. but he will charge three, holy cow. i see my time has run out.back i yield back. >> at this point we will yield five minutes to the representative.

>> i appreciate the witnesses testimony.fect to help others that were affected by the law. a my wife and iran a small business 22 years so we know what it takes to meet the payroll to keep the doors open to do with regulation and taxation sabir isll sympathetic to smallnumb businesses on a number ofow t levels and that they have to stayay profitable and find a way to grow. t that is why i wanted to be a member of this committee to help smallto businesses be more successful.'v since i have come here last year i has been trying to partner with people on both sides to find reasonable fix is i feat there are many benefits now with the

implication was dash implementation of. but the issues of our real as well as within the legislation over the decades we have to make amendments and revisions to a bill that size and magnitude. i am clearly interested to learn about that from you. as i have heard your testimony i am reminded ofe them a three piece of the complexity that it isan confusing and it is challenging.d my j my job as a member of congress is to look get through all of that to become successful. i have a question for each of the witnesses if you

could ask one question foronsi those agencies that areat responsible what would the top priority be? this is about what we could do. but let's figure out what to do that makes things better. not just back-and-forth arguing thatix how could we t fixings. what wouldho those be? >> i would position the aggregation role to fulfill the scope to promote th growth of business and treat the industries separately within the context to deal with no work force of what they are to position in what is viable.

>> it is hard to choose. i would support, looking at the industry by industry and if it has a true control and not just ownership for indirect ownership butactu somebody making day-to-day do think the 50 employees is too small. is too small. spinnakers respect to the rules that impact small businesses are with just taking a second look at where the rules are with respect to the insurance carriers because there is not the same level of compliance required of them to support the employer mandate. i think some of those gaps in the law which make it difficult if not impossiblesine for businesses to get the coverage were specifically

needed to be addressed. o to go off thef topic of small business of minimum it is essential coverage and the plans that will be offeredth the skinny plant the article about six months ago they will not be sufficient coverage but satisfy the employer mandate. but when individuals realize they have coverage not sufficient about what the law is required, but there will be significant backlash to not even from what we have seen so far to date. >> looking at the insurance product the real issue withs health care in this country is the quality of care is not what to it needs to be the hca did not focus onal quality except a very small a l segment so more needs to be

done. t but the required insurance the types does not make it very easy for people toly comply.s. >> i yield back. thank you for your good to answer. >> i think this point there are a couple of that onoh questions? oh i guess we will yield to you first. >> i apologize i am plates and thank you for joining us today. a couple of questions ms. walker and others have mentioned the changes you were looking for was arder legislative change and i appreciate that perspective about what we have seen with the affordable care act ist not necessary to make the changes we had 10 executiveti actions with the employer

mandate you have another year and as a consultant to makes the job tough if they tell you the rules to say they could delay another year but it is the law of the land to say we will not make employers how you handle q that question with a virus is not finalized? bus >> i had a business in kansas that on july 1st they made changes and everythingat they could but what a mistake. july 2nd the president said just kidding we willr d suspend it for another year so what answer do you give what does that mean?

>> it does make it very difficult for a small firm like mine because we have limited resources so you take the initiative to communicate then it changes so you reach out and have to read communicate so that amount of time and expense associated is great. >> it is not used fortunately for the restaurant side is just not sustainable so something hast to be done so we can feel it before something happens. the

>> i have yet to see anything from the white house there have been suggestions reid mentioned in the sba and the administration to change one letter of the log messagesthat by action it is unacceptablee but as far as the trend of the part-time the economy.f i did not know they were that bad for out of five newas t jobs? they are part-time? >> for every one full time there are four part time soe for at n a five. >> that is surprising in and of itself it is the trents

since it used to be successful times to the one part-time spinet that his is a devastating figure people out there are looking for a job in particular the young people who have been so devastated with this economic recovery.n yo can you describe in thiswh parter time economy? y why are youou providing health insurance for someone who works 20 hours per week? to make that and a changingin environment you have to say that the reality is not just figures story after story of small-business owners say i did not hire anybody thisnext

week or next year because i am worried about thei threshold.do ta i will not take the risk but the message we sent from washington is we will let you know, next year. n that is a frustration that i hear.ha >> fiven lead ad it is an issue cry of for leadership in terms of what you do today and speaking thatcher's coming to some y sort of agreement and to the large business owners other than and the issues being raised issues being raised and the lack of a solution just being acceptable or considered

inevitable. we need somebody to -- and a group of people, perhaps, to step up and say, something's got to change. because we can't sit back and watch the train go down the tracks with the bolts flying off. because we know what's going to happen. and this is our country, our economy, our fellow citizens, the children, the young people trying to get jobs, people trying to grow a business, business own who are are trying to do planning, who are putting off expansion, putting off buildings, putting off all kinds of things that could create and generate other jobs not just within their own businesses. construction work, another thing. so it's crying out for leadership, and i would say this is a great start and i would continue down that path. >> thank you. i yield back. >> thank you. that was a great summary, actually. at this point, i'd like to yield five minutes to mr. payne. >> thank you, mr. chairman. >> mr. payne, would you yield for one second? >> yes. >> okay.

i just -- if not -- >> you're the ranking member. please. >> go ahead and use your five minutes. i will come back. i didn't want to lose the train here. >> ma'am. >> ms. walker, you mentioned and it struck me, that number. one out of five jobs are part-time jobs. what was the number that you. >> for every one full-time job created, there's four part-time jobs created. >> we had a hearing that i mentioned before. we have the expert witness dean baker from the center for economic and policy research. he said the vast majority of people who work part time do so voluntarily. in many cases, they have family or other obligations that make part-time employment desirable, even with the current weak labor market. more than two-thirds of the people who work part-time report

they do so voluntarily. thank you for yielding. >> thank you. well, you know, it's just an observation. you know, the affordable health care act is a law. very new in its infancy. naturally, there are going to be issues around the implementation. we know the problems that we've had to this point, but the meat of the act, i think, will revolutionize health care in this nation. you know, if we look back at other large programs that have been implemented over the course of time, one being social security as probably the easiest one to mention, when it was implemented, it was going to destroy this nation. we were going to socialism and how could we do this, it was going to ruin the nation.

i think most americans now think that social security is part of the fabric of this country. so i see the affordable care act having the same type of life in this nation. you know, when they started social security, they used your name as your identifier. well, guess what? they had to tweak the system because there were a lot of donald paynes and ms. bakers and what have you, so they went to social security numbers. so nothing is perfect when it starts. you have to let it evolve into something that's going to work. so i like to use that example because it's probably the easiest example to use in terms of rough starts for large programs that are successful over the course of time. and ms. baker, in your

testimony, you state that this law leads small business owners to provide health coverage in an industry where that's not the norm. well, let me just say that -- you know, i want to the say that upsetting the norm is precisely what the affordable care act is about. over the last decade, health insurance premiums for small firms have increased 113% leading to dropped coverage. the affordable care act was enacted to upset this norm and make it easier for small businesses to compete and offer quality benefits. the norm prior to the law allowed insurance companies to drop coverage for employees when they needed coverage the most and discriminate against people with pre-existing conditions. the law upsets this norm. prior to the affordable care act, it was normal for an

average u.s. family and their employer to pay an additional $1,000 for uninsured people to cover that cost. the affordable care act aims to upset this norm by bringing the uninsured into the system, driving overall costs down. now, there are issues with the law that need to be tweaked, but the bones and the substance of the law are good and are here to stay. further, 96% of u.s. businesses have fewer than 50 employees, and according to the last census data, less than 1% of businesses have between 45 and 49 employees, placing them at risk of falling into the abyss of the employer mandate. again, that is less than 1%. now, i'm interested in addressing valid concerns about the affordable care act. you've stated many today, such as the compliance and the burden on small businesses. however, i really find it

nonconstructive to continue to play on the fears of the american people rather than work on ways to make this law better and see it implemented successfully. so, you know, over the course of the last two days, i've heard the president speaking before groups and saying, if you have ideas, and i believe he's reaching out to our colleagues on the other side, if you have ideas that will strengthen the law, then let's discuss it. but to continue to try to tear it down and sabotage it and not even allow it to go through its natural courses is counterproductive. so, you know, in terms of solutions -- and i'm very open to the criticism and the potential of making it stronger. so i'm glad to hear your testimony. mr. winstanley, you mention ed -

>> yes, sir. >> you mentioned the e-flex coalition that advocates for greater flexibility and options within the law. i understand that the restaurant industry has a unique makeup. what proposal does the coalition have to provide flexibility while upholding the law's goal of expanding insurance coverage for all? >> i don't -- where do you see the e-flex? oh, it was referenced in the regulations. i'm not familiar enough with that. what i would like to speak to, though, is you mentioned social security. to my generation and every generation behind us, what social security is known for is being a completely unsustainable

program. i would also like to mention that we -- you and i got started. i got started with a 24-hour diner. it had about 10 or 12 employees, my twin brother and i stayed up a all night building that place and turning it into a business. i've been fortunate to have some good advice from people over the years that have done similar things and what they've shared with me time and again is that -- which turned out to be true in our case, is every next step you take is harder than the step behind you. there's significant growth burden that comes with trying to build a real business. and the 50 employees, regardless of what industry you're in, the 50 employees presents an additional significant hurdle for people who are trying to build something meaningful. i think it's counter to the spirit of this country. >> thank you. the gentleman's time has expired.

mr. bentivolio wanted to ask a follow-on question. >> thank you, mr. chairman. just a few short questions. mr. winstanley, health care law requires you to inform your employees about the health insurance choices available to them. is this an additional burden and expense for your companies? >> i'm sorry, it requires us to inform them about the health -- yes, there's a significant amount of education that goes on. as anybody can kids knows, it's hard to educate somebody who's not interested to hear what you're saying. the -- you know, it's traditionally been challenging for us to educate to the groups of people that we were able to provide health insurance to. so yeah, i see that as being a very significant challenge. >> i was back in the district last weekend. i had dinner at a restaurant. the waitress came over and recognized me, a big supporter.

she told me her story, that she lost her job, now is working two jobs all because of the health care. she had lost it when they found out about this employer mandate before they delayed that, right. they had to reduce their employees. now she's working two jobs. do you have a lot of waitresses or people on your staff that are working two jobs to make ends meet? >> we have a significant number of people doing that. and we have -- what we've seen is there are a lot of people who need part-time jobs. that's because wage and job growth in permanent full-time positions hasn't been there while the cost of childcare and housing continue to increase. >> you think that's largely attributed to the affordable health care act? >> i think it's attributable to a general slowdown which the health care act is very much influencing. >> so let's see. ms. baker, under the aggregate rules, a collection of two or more corporations with common

stock ownership that are connected in one of several ways, many small businesses don't issue stock. how would the rules be applied in those cases? >> they look at ownership, so if you're not a corporation, they look at investment and equity within those companies. so in my example, when i invested in a small women's boutique just as an investment, i don't manage or operate that on a day-to-day basis. those employees are then pulled into my cpa firm as part of the rules of aggregation. >> and increasing the cost. >> and increasing the cost. even though, you know, mr. payne mentioned that the norm, you know, i think the norm is we'd all love to provide health insurance in every industry, but that's a very small women's boutique. there's very few other women's boutiques that would have to require health insurance because they're small businesses and not

meeting the 50 employees. for me to have to provide health insurance makes me not competitive. just because i'm an entrepreneur and owned businesses in different industries. >> let's see if we can sum up. higher deductibles, higher premiums, additional legal costs, correct? tens of thousands of dollars for a small business. and you're less competitive. thank you very much. >> thank you, mr. bentivolio. at this point, we'll call a hearing to the close. i want to thank all of our witnesses for being here today. it's very timely. i think what some people do forget is even though the employer mandate, the penalty portion has been delayed a year, the calculations as to whether or not you will have to comply start in three weeks' time. so on january 1st, that's the first beginning of what will be 12 monthly buckets of keeping track of the hours and the

employees to see if you hit the 50 ftes or not. so it is a very timely situation. we certainly heard a lot of give and take, i think. we all recognize that there will be changes that will be needed in this law and hopefully now the president would agree to make some changes. he has not up until this point in time recognized that, but i think an overwhelming number of americans today are expressing displeasure in the law. and certainly as we heard today, compliance with the law and the application of the complex aggregation rules is a burdensome and is confusing for business. and i think it almost goes without saying that a big government, one size fits all set of regulations and laws that tell a business what benefits they have to offer, whether that's a restaurant, a construction company or a high-tech manufacturing company,

is, in fact, a drag on the economy. today's hearing did highlight another example of the unintended consequences of the affordable care act, namely the high cost to business of hiring a cpa or other tax adviser to give advice on the irs aggregation rules, money that is better spent on growth and the creation of jobs. we on this committee will continue to closely follow the implementation of this law and its effect on small business. i would ask unanimous consent that members have five legislative days to submit statements and supporting materials for the record. >> yes, mr. chairman. before we close, i just would like to thank all the witnesses, and it's kind of a breath of fresh air to hear that we're talking now about fixing and looking at ways where we could improve the implementation of health care. so it's great to know finally that we are moving beyond

repealing obama care to finding common ground to make it work because it's the law of the land. thank you. >> thank you, ranking member. with that, without objection, this hearing is now adjourned. [inaudible conversations]

>> it is time to ensure our collective bargaining laws so students have a level playing field to organize for a better deal for workers and wages for the battle class. [applause] is time to pass the paycheck fairness act. [applause] it is time to pass the employment nondiscrimination act so workers cannot be fired for who they are or what they love.

[applause] and even though we bring manufacturing jobs back to america, we are creating more good paying jobs in business services and education and health care. we know that we will have greater portion of our people in the service sector. guido's that there are fast food workers, the airport to workers commanders is assistance cover retail sales to workfare tales of. [applause] and still living at or barely above poverty it is will pass the time to wage -- raise the minimum wage that is lower now than when harry truman was in office. [applause] this should not be the ideological point.

it was adam smith the father of free market economics who once said they you feed it, close the people should have such a sheriff the produce of their own labor as to be themselves. and for those who don't speak all the english. [laughter] led the translate. it means if you work hard you should make more money. [applause] if you work hard you should be able to support your family. we know the argument has been used against the higher minimum wages and people say it hurts the low-wage workers and they are less likely to hire them there is no evidence but researchers

shows a raises income said bruce the short-term economic growth. [applause] others argue if we raise minimum wage companies will pass the cost onto consumers but a growing force of businesses extraordinary companies in america of that provide decent wages and trading for the workers to consumers. one company indorse carolina offers six leave iran to maternity leave another offers retirement plans with the good work balance. companies are out there that to right by their workers and recognize paying a decent wage reduces turnover and helps the bottom line. they have more money to spend save a and eventually

start a business of their own for career broad majority of americans did -- agree we should raise minimum wage that is why new jersey voted to raise fares higher and the d.c. council voted and i agree. [applause] i agree and i will keep pushing until we get the higher minimum wage across the country and it will be good for the country and our families.

[inaudible conversations] >> good afternoon. first problem let me acknowledge the announcement of schaede yesterday regarding christine fox do is going to be our new acting deputy secretary of defense.

i recommended her to the president because i felt we needed the continuity to continue with some of the most exciting challenges we have been facing him and will continue to face in this department over aid member of the ears. you know, what those are. budget sequestration, we are finishing up the review and how all that impacts the strategic interest and focus of where we go from here. she brings the continuity and leadership and highly respected in the congress, in the white house and around here. i want to acknowledge heard coming over to you give us her time.

a few months ago she thought she would escape. she did for a while. she will be an important part how rico for work over the next few months. i have great confidence and i vote for virtues' spending time with her again. this morning we laid out the back steps for the next few weeks. also want to take the opportunity to say ash carter we had a ceremony and he will be greatly missed. i will miss him personally and has been a tremendous part of this institution's over the last five years and even before that. i want to publicly acknowledge his service had a sacrifice and what he meant to all of us and we will miss him.

if this afternoon. general dempsey and i want to talk about what way are doing or decisions made it to go forward in the area of consolidation and realignment and to efforts to streamline our headquarters operations and in particular the office of secretary defense and general dempsey offers some comments on what he is doing with the joint chiefs. you know, institutional reform is the important part of what we have been trying to accomplish this year. not just a matter to be forced into that because of sequestration, that is part

of it but like all institutions, we are captive to audience subject to environments, but challenges change. our world, our country tuned this institution is not the same place as 12 years ago or five years ago if you begin with we have unwound from '01 long war and unwinding from the longest war we have ever been in. afghanistan. and different threats a different gimmicks, a strategic interests in very but the fed doesn't mean we are we treating but i am leaving today to for the of releases today some dialogue

said the overshoot better. but i will say and it does relate to what we talk about today that our interests are the world's interest did not to find a buyer one region or to retreat or area. but this announcement is today as we develop toward in tucson next year of changes and adjustments and realignments made in this institution and to better prepare this institution to deal with the threats and challenges not only here today but what we anticipate is to come.

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